Retirement Savings Contributions Tax Credit


MoneyTips

Contributing to a retirement account can be difficult for lower income households, but one can argue that it is even more important for those families to take advantage of all the retirement savings options that are possible. One of the lesser-known options applies directly to lower-income families – the credit for qualified retirement savings contributions, also known as the Saver’s Credit. Note that this program is a tax credit and not a deduction, meaning that the amount you qualify for is subtracted directly from the taxes that you owe.

The credit applies to most retirement plans – 401(k)s, IRAs (both Roth and Traditional), 403(b)s, 457(b)s, SIMPLE IRAs, SARSEPs, and other plans. It does not apply to rollover contributions, and any recent distributions that you received from these plans can reduce the amount of your credit. As of 2018, you may also take the credit for contributions to a Achie…

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